Technical question - UC AP

Altior

It goes full circle, as I can't see a legitimate way to estimate the hypothetical market value myself. I could do it, but there's no guarantee that the DWP would use the same methodology. So I feel like I'd have to declare the face value, which takes me over £6K!

The only route I see is the one that I alluded to upthread. If it's only the closing AP capital value for the first actual AP that really counts, then I wouldn't have the value of that bond at that point. So not including the £2K one in the application (eg 2nd June). I'd still be under the £16K as on the application date if it was included, so still a fully valid claim.

So then you're looking at how legitimate it is not to include the value on the application, in the knowledge that I won't have it at the first AP end point. Is there a requirement to substantiate the application's capital value, and are there any negative outcomes related to a mismatch if it doesn't materially impact the claim, and someone verifies it.

It's hypothetical now as I am 99.99% decided to abandon the idea of applying before this £2K bond matures. It might just be worth me cracking the ISA early, and paying the interest penalty so that I can apply a few weeks earlier (in July). But it's quite marginal by that point.

Altior

The never-ending saga 😂 Couple of observations

What is capital
52020 Capital is

1. savings from income such as money held in
   1.1 cash
   1.2 a bank or building society account
   1.3 a save as you earn scheme
2. a lump-sum or one-off payment such as
   2.1 compensation for a personal injury
   2.2 money which has been borrowed
   2.3 one made by an employer to a person who is made redundant and the payment is not earnings
   2.4 one made by the Home Office to people on the Refugee Resettlement Programme
   2.5 one made to recompense people who have incorrectly had to pay care charges in the past
3. investments such as
   3.1 businesses
   3.2 capital and income bonds

The law appears to consider this type of asset as an investment….

Capital in the United Kingdom
52611 The value of capital which a person has in the UK (see DMG 070880) is its current market or
surrender value less

1. 10% of that market or surrender value if there are costs of sale and

Costs of sale
52620 10% of the current market or surrender value or price is only deducted if there are costs when a
person sells capital. 10% of the value or price is deducted even if the actual costs are more or less than
that amount.
52621 There are normally costs of sale if a person

1. uses another person to sell the capital, such as
   1.1 an estate agent or solicitor or
   1.2 a broker or
   1.3 an auctioneer or
2. needs the services of another person before the capital can be sold , such as
   2.1 a solicitor or
   2.2 an accountant

Perhaps I don't need to work out the market value of these 'investments', as everyone appears to agree I think that there would definitely be a cost of sale. ie to do this properly I would need to engage the services of a solicitor.

So, I can legitimately take 10% off of the face value when declaring the value of locked income bonds. And it won't be material anyway, as the £2K one wouldn't exist at the end of the first AP.

The actual market value is therefore, superfluous in this context?

Altior

This £2K Investec cash bond actually pays all interest on maturity. However all of the other ones left are Close Brothers, which pay income annually, and I feel fit the definition of an income bond:

Income bonds are savings or investment products designed to pay out regular interest income (monthly, quarterly, or annually) rather than compounding it. They typically offer a fixed or variable interest rate over a set term, allowing investors to deposit a lump sum—often from £500 up to £1 million—providing a reliable income stream, often with 100% security if backed by HM Treasury through NS&I.

I may have conquered it after all 😄

Altior

When income becomes capital

52050 Income other than earnings becomes capital after the end of the period it is payable for

1.1 R(IS) 3/93

Example

On 2 February Cath makes a claim for ESA. She has £7,550 in a bank account. This includes a month’s occupational pension of £250 which Cath received on 30 January. The DM decides that Cath has capital of £7,300 because her occupational pension payment of £250 has not become capital. On 16 February Cath withdraws £320 from her bank account to pay her car insurance. There is no evidence of any other withdrawals since 2 February. The DM decides that Cath has spent her occupational pension payment of£250 and that her capital has reduced by £70 to £7,230.

I feel like this permits me to remove the most recent ESA payment from my capital balance on the application date. As the ESA period is a fortnight.

Yamor

On the "income bond" and "investment" issue, I wouldn't get bogged down on the terminology. There is no difference legally.

But yes, in principle, for you to sell the bond (or whatever you want to call it) now, would likely require a solicitor, so you should be able to deduct 10% of whatever the market value is.

If a 10% deduction from the maximum possible market value (which at most could be the amount of the bond plus the interest due) is sufficient for your purposes, then yes, that could work.

On the recent ESA payment, the guidance you have quoted is for legacy benefits, which have quite different income attribution rules.

For UC, DWP practice is to treat it as as capital from the AP following that in which it is received, which really means from the start of the AP, but in practice means it only counts if you still have it at the end of the AP. This practice hasn't been tested before the UT, so I can't say it is definitely correct.

On your overall situation, firstly, it is important to remember what @NedS said earlier in the thread: whatever you declare as capital in your initial claim will simply require verification by DWP, and won't mean a whole review being carried out.

From a Council Tax perspective, my experience with the Councils in my area is that when a UC claim is made, they will wait for the first payment statement before calculating entitlement and making a decision, so as long as your capital is below £6k at that point, you would probably be fine.

born_again

I think there is a lot of over thinking here.

Savings to declare is the amount in the account at the point it is declared (so if interest is only added on maturity, then it is the account balance at that point to be declared). In this case start of UC claim.

When it matures & OP can take the funds out it will be worth balance + interest, once it is withdrawn to current account.

If OP then pays off a CC balance with that funds within a AP. Then OP needs to declare a change in savings.

I still think that OP needs to get all of this savings out of the way & stoozing debts paid off, before starting any UC claim.

So that it becomes a far simpler task to apply.

Altior

I was searching for examples of where NS ESA income was discussed in reference to capital declaration. It was if reference to such a query that a poster cited 52050

Thread here

@Yamor will my application capital need to be physically verified by the DWP, even if it is under £6K ?

Altior

https://forums.moneysavingexpert.com/discussion/comment/81938232#Comment_81938232

Over thinking is an under statement 🤣

This is my nature, alas. Once I have built up a challenge in my head, I can't give it up, even if I have told myself I will let it go, and with this one, have now publicly threw the towel in twice. It's a large flaw of mine, but I'm unlikely to change at this late stage lol. Especially when it comes to finance and numbers, I simply cannot face being defeated.

You're right and waiting until the end of July would mean zero complications. It just feels a long way off right now, it will gnaw away at me, however I try to park it away from my current thoughts.

Yamor

https://forums.moneysavingexpert.com/discussion/comment/81938261#Comment_81938261

DMG 52050 comes from case law relating to legacy benefits. UC works differently, and it is unclear how to best apply the principles of that case law to UC. As I mentioned earlier, in practice DWP treat it as capital from the AP following the receipt of the payment. In your case, that would mean from the start of your claim. I can't say for sure that that is correct.

In practice, when making your claim, I wouldn't be concerned about leaving it out of account.

Regarding capital verification, as per @NedS comment earlier in the thread, they do not normally require verification if the total capital declared is under £6k.

Altior

Thank you!

Time to draw stumps on this one.